The Power of Creating Value: A Conversation with B. Pagels-Minor and Tam Danier

I would like to share with you an enlightening conversation I recently had with B. Pagels-Minor and Tam Lisa Danier from The Drops Podcast. Our discussion revolved around the concept of creating value for others in order to achieve success.

As we all know, success is not just about personal gain, but also about making a positive impact on the world around us. It's about creating something that adds value to people's lives and solves a problem for them. This is why B. Pagels-Minor and Tam Lisa Danier believe that if we focus solely on creating value for ourselves, the world may tend to avoid us.

The concept of creating value for others is not just applicable in our personal lives, but also in business. In fact, B. Pagels-Minor and Tam Lisa Danier apply this principle to their approach to investing in startups. They ask questions such as, who does the startup serve? what problem are they solving, and what proof points do they have to validate their assumptions? This helps them gauge if the startup adds value or not.

We also discussed the importance of trying one's hardest and continuously working towards positive trends in product development and life. We cautioned against wasteful startups that are solely focused on generating wealth, without adding real value or solving a problem for their customers. In today's fast-paced world, it's essential to keep up with the changing trends and remain relevant.

We delved into possible proof points, market size, and unique value propositions, and emphasized the importance of validating assumptions and looking for forward momentum and progress in more mature startups. It's essential to be aware of the market and the needs of the customers and to continuously innovate and evolve accordingly.

Transcript

B.: Let me show you how it's done. Hello, folks. We are back with the Drops Podcast. Now, one of the great things about Tam and I is that we travel, we go places, we show up, and sometimes when we show up we meet cool people. In this case, for me, I went to a mixer, [unintelligible 00:00:22] is a network of angel investors who invest in various companies. I met this guy named Davis Subar. It was so interesting because what I really liked about him was that he was a dad. I was like, "I'm a new parent. I'm going to ask you a lot of questions about being a parent."

If you have a question on your mind such as how do I not screw up my kids, you just sometimes ask people randomly and then they give you really good answers. That's what David did for me when we first met. I'm so happy to have you on a podcast, David. Let me tell them a little bit about why you are here. David's mission is better products faster. With strategic implementation of the lean startup method, this mission has led to major valuation increases for quickly growing lists of more than 30 technology companies. His strategies are becoming the standard for how technology companies scale while continuing to deliver products that impact the lives of their customers.

He began his career in R&D and now he leads teams in more than seven countries for clients that shift products for tens of millions of customers. Some of his career highlights include building products with more than 600 billion monthly page views, building hardware in the operating system for an augmented reality device, assisting lynda.com in their $1.5 billion sales on LinkedIn, advising the Walt Disney Company on Disney+, founding two companies and serving as the advisor and executive for three unicorns.

Before we also get started, I just want to quickly say thank you a lot for Disney+ because I did not know that it was going to be one of my go-to streaming services, but it is. I really love it and it also seems to know exactly what I want to do sometimes, which is actually very hard. It's very surprising how many people do not do personalization well. David, [00:02:00] again, welcome to the podcast.

David: Thank you. Thanks. I'm really glad to be here and thank you for the introduction and also love to talk about the kids. We'll talk a lot of stuff today I'm sure, but of all this stuff, the kids' stuff is the most important.

B.: Exactly. I think actually maybe that's why we can get started. One of the things I thought was very interesting when we first had lunch is that you were telling me about your career journey. I was like, "It really don't make sense." I was like, "How did you end up in this position?" I think maybe if you can couple that with how you end up in this position and you also happen to raise some pretty well-adjusted kids, I think that'd be a great place to start.

David: Those are both two different questions in the same question. How did I end up in this position? You hinted at it before. I started my career doing research and development in AI and machine learning at a military-owned think tank. That's what I thought I wanted to do. I was really excited. I'm going to do some research, we're going to move where science is. That was what I wanted to do. I found out that I don't like doing research. Research is you write a paper, you present it at a conference, a couple hundred people listen to it, and if you're Newton or Einstein, you've changed the world and it turns out I'm not Newton or Einstein.

Engineering is about building products that people actually use and that I could do. That I could do and have an effect on the market. That I could do and build something that I can go, "Hey, mom, this is what I did." It wasn't really about talking to my mom in particular but being able to build something that you could describe it. When I was doing research development, AI, and machine learning, we were doing neural networks and some really advanced stuff and sigmoids and [unintelligible 00:03:47] networks and all that stuff. Actually, I was living in DC at the time and I would go to parties.

My wife was working in Capitol Hill, I'd go to those Capitol Hill people and they would ask me what I would do and I would describe it. [00:04:00] They had no idea what the hell I was talking about. When I was building products and you're focusing on what value you create, me, that's way more motivational. To me, that's organizational. You can organize your thinking and your philosophy and your groups and your departments around that. I started as an engineer then I was a manager and a director then CTO then chief product officer, but it was all about building something tangible. That's how I got it because I want to have an effect on the world.

Now, back to the kids' thing. Here's where that tie-in goes. I say to my kids is do something of value to somebody. You got to be smart, but money is a side effect of doing that. If you create value for someone else and if you're smart, you can figure out the economics. If you're concentrating on how do I create value just for myself, the world will tend to want to avoid you. Talking to my kids, it's a lot like a product roadmap. Everything on the product roadmap is a bet. Some bets you're going to get right, some bets you're going to get wrong. That's okay as long as you're trending positive.

I say to my kids, I have three daughters, "Try your hardest. Something is not going to work, but if you continually try your hardest," my kids are smart and they're doing stuff that they're motivated to do, "you're going to trend positively." It's the same as product roadmap. I don't want to make my kids into little automatons, but the same principle is about adding value and getting value as a side effect of that are the same principles.

Tam: I got a question just based on that about adding value, and I like that kind of ethos for life, how do you [00:06:00] add value? I remember this. One of the things that we talked about when we were learning agile in these agile transformations is about each role is about adding value to the process and so it's a good way to look at things. How would you describe a wasteful startup?

When you hear some of these ideas of startups coming out in the market and you're like, "Are you really solving a problem?" Is that where you put all of your ingenuity into solving some of these things that are very copycat? For example, the rapid delivery race that was happening. How do you feel about that? Would you describe coming across startups that add value or don't add value? How do you distinguish or put them into buckets?

David: If they're not adding value, then I think their days are probably numbered. I'll start by asking a CEO, who do you serve? What problem do they have? How are you solving that problem? If they can't answer that or if their answer is, "There's a market here that I can leverage to generate a lot of money out of. That's my goal. I'm going to generate a lot of money out of this market. I'm going to be really wealthy doing this." Congratulations to you, I suppose, but I can't help you.

Maybe you might actually get really wealthy. That's all right, I suppose. I can't help you because I can't build a formula that's consistent for building a company of value. The shareholders care about, are you building a sustainable company that has moats around it, that's going to generate revenue and cash flow and profit and all that stuff. If your focus is, I'm going to make a lot of money as soon as I can, the system is going to spit you out. I can't help you.

Tam: Agreed. The question is, how do you know upfront? There's no pitch deck that ever comes across any investor's desk that says, "We're just here to make a lot of money." It never reads like that. There is always [00:08:00] some hypothetical problem to solve and it's very fluffery in a lot of ways. What is your method for determining value?

B. and I on this podcast, if anybody takes a listen to just any randoms, we are good at defining value and saying beforehand, there's no value there. This is going to fall. We talk about PMF, product market fit, it is lacking value in one of these areas. How do you yourself, when you're looking at these agents, how do you determine upfront defining what that value is? You can say the market is going to prove you wrong eventually.

David: I want to know a few things. One is, what proof points do they have that this is a problem for somebody? What proof points do they have that the market is big enough? What proof points do they have that what they're doing is unique and is defensible? By the way, they're not going to score a 100% on any of those. My next question is, how are you going to validate your assumptions and how are you going to do that cheaply, and how do we know in a tangible way? Those are the questions that I'm going to ask. Now, if you're doing a pre-seed or seed-stage investment, some of those were very highly speculative and a bit of it is going to be spray and prey.

A lot of preseason investors just throw money out a bunch of places and just see what develops and then ask those questions. That's fine if you've got a lot of capital to put out there and then you're believing in the jockeys, not the horses as they say, but for things that are a little more mature, that people who have been around then it's like, who's actually using your product? What have you done that's gone out there? What have you done that's validated, that's better for, call it, seed A series things like that. You should be able to see forward momentum and progress. With the concept that I talked about before that [00:10:00] everything on the roadmap is a bet. How do those bets pay off? By the way, also, how did you structure the bets? One thing I suggest is saying everything on the roadmap should have an epic statement. We believe by doing this feature for this user, they will achieve this kind of value and we'll know we see this metric move. I would ask an entrepreneur of a company that's actually building a product out in the market, how have your bets been? Do you even have a structured bet or you're just doing arbitrary stuff?

If you're just doing arbitrary stuff, what are you going to do to figure out whether what you're doing makes sense if you're having structured bets which I'm suggesting is how you're doing? Once again, I don't expect everyone to be 100% correct. Those are the proof points that I would look for.

B.: I have an interesting follow-up to that too because one of the things that I think are very fascinating because along with this, what Tam said about the pitch deck, in the pitch deck you're not going to see something specifically that says, I like character, for instance. I find especially for myself when I'm talking to founders, when I'm talking to just humans, it's pretty apparent for me, oh, there's something here. It's like there's some energy that's quite wrong about this person or whatever. [unintelligible 00:11:18] about you, [unintelligible 00:11:20] with this idea.

Through your career, I'm sure you've met people where you're like, I met this person, I knew they were going to win. From the very first time I had a conversation with them, I knew they were going to do well. I'm sure conversely, you also met some people that as soon as you met them, you're like, "No, absolutely not." Can you tell us a little bit more about those experiences and how you [unintelligible 00:11:37] or what you've covered over time? Things that you can add on and say, this is how I can distinguish between these types of individuals?

David: Yes, sure. I'm going to think about some examples and I might name people in the positive examples and maybe not name the ones in the negative ones. The people that I don't believe in, I can bottom out with questions. I can ask them [00:12:00] questions that they can't answer in a consistent way. It's okay that I might be able to ask you a question you can't answer but then it's about, do you come across and say, oh, that's a good question. I don't know. Let me go think about that or do you try to cover up? If you're trying to cover up, then there's some dishonesty there.

On the other hand, people that I believe in are they're transparent, they're authentic. This all sounds very flappy. They're transparent, they're authentic and they're passionate about what they do. I'm going to talk about Elan Lee. I don't know if you play the game Exploding Kittens. Elan is one of the founders of that company. I've known him since he was 20, 21. He was still in college. He cares about games. He deeply cares. When they were building Exploding Kittens, he did it on a card deck. I played like the [unintelligible 00:13:08] I have 52 cards like aces, queens, kings, that kind of thing.

He cared about it. He was on a mission to build a great game. By the way, tabletop games are a little different than technology. There's a big market, but you don't know if someone's going to play your game. He cared about making them. Then when he-- I'm going to screw up the number, they have the most number of supporters in a Kickstarter ever.

I think they collected $7 million but I don't know how many supporters they have. They were passionate about having that 30 days of Kickstarter, creating value for people to want to do the Kickstarter. He was thinking about, how do I make this fun from beginning to end? He has a revenue source. You go to Kickstarter and buy stuff for them. He was making money, [00:14:00] but he thought about it and he's very creative about the way he thought about it. It's a little bit hard to answer the question in a very, here's the three features I look for.

I do look for, is the person authentic? If I ask them a hard question, do they try to cover or do they think it through with me or do they say I'll get back to you about that? Then do they fulfill their commitments? There can be something slimy that your spidey sense just goes, "You know what, something doesn't feel right here."

B.: It's so interesting. I always call those people the snake oil salespeople. People who you're out there like there's no way that this thing is going to cure my acne. There's no way this is going to make me grow hair. It's like doesn't make sense what you're saying. I totally get it and something that I think especially so I spend a lot of my career outside of tech working with non-profits and I found that most in non-profit work surprisingly. Primarily because in non-profit work because there's been this weird confusion about whether talented people work in non-profit or not.

There's a natural thing where it's like, "Oh, work in non-profit, [unintelligible 00:15:14] want to make money." It's like, or you can't make other money that's why you work in non-profit. The reality that some of the best people I've ever worked with work in non-profits. They've actively chosen to be poor. I'm sorry, that's the best way to describe it. They've actively decided to do it. It's not because they're not geniuses. Within that industry, I've seen so many of these, you really don't have substance as this person over here. It becomes even more glaring there.

I really think that that's the way that I--

Tam: Is that your red flag? What would your red flag be?

B.: My red flag is that this is almost always happening with these people. Let's say we're going through a conversation and most of the conversation is going well. At some point, we might have a slight disagreement. Instead of that person having a robust conversation and saying, oh, the reason I have this particular opinion [00:16:00] about this thing and they change whatever your opinion is. They're like, oh, actually, you've completely [unintelligible 00:16:04]. There's no way that someone can completely move you from an opinion in a conversation.

Tam: It's not movable.

B.: Yes. That is completely sketchy to me. Unless it's a fact. It's like is the sky blue. You've thought this whole time it was grey and I can say definitively science actually says it's blue, that makes sense that you might move, but these are moral questions of what do you think of this particular thing that could go either way and they just completely change their opinions to whatever you said. That's a huge flag for me.

David: I have two examples of that recently. I've been asked to be on the board of directors for a non-profit. I was having coffee with the two chairpeople, the people who lead the board, and the CEO. I said, "I have three criteria to be on this board." I said, "I need to make sure this organization is doing good work." I'm giving my time for free, which I'm like, I think the organization is probably good organization [unintelligible 00:17:06]. I want to make sure it's doing good work. I want to make sure that other board members are adding value, work together. I want to make sure I can add value.

The CEO of the non-profit said, okay, great, we're going to bring you to-- this organization runs group homes and we're going to bring you to a group home. I said, "How do I meet some of the people?" I'm simplifying the conversation. I'd like to get to a board meeting. They said, "We can't do that, but here's how we can have you meet the other board members." In that case, the CEO of this non-profit and the board members understood what I was saying and there was no resistance. If there had been a resistance, I would think the resistance would have been we disagree with these three things that you're saying, David, to make sure that the [00:18:00] organization makes sense.

The board members can add value and you can add value. I'm sure they would have-- if they had pushback on that and for good reason I would have been okay too, but they were like, "I get it. Here's what we can do to help you solve the problem." That's one. Second is, I'm working with this company in Australia. We're talking about-- I'm trying not to reveal too much information about a significant product they're going to do. There was video they wanted to put on it and I said to the product manager, I don't think that makes sense. I don't think that's consistent with the offering of the product for the users.

He showed me some examples of other products that were similar. I said I don't think that makes sense for this market. Then he explained it to me and why it made sense for this market. I was like, oh, okay. He gave me real data. [unintelligible 00:18:51] gave me real data that was significant and I was like, "I believe you." Then he had a roadmap. His roadmap in the first release was going to take months and months. It was really big. I said, "You're investing way too much to prove your thesis here." He said, "Well."

We had this conversation about why they were replacing one product with another one, and why he had to have every feature from the old product to the new one. The reason they were replacing is because the old product sucked. I said, "What about if you had a small product that worked well? Would that show user value? Would users like that better?" He said, "Yes." I said to him, "What happens if you released a small thing and got market feedback?" We had this conversation, and he did what I-- just like, "Oh, I get your point. Let me do that."

We were able to have this logical step-by-step conversation in both cases. One, he convinced me when I convinced him, but it wasn't on fluff. It didn't just go like I'm running the product on an interim basis. You're running product, you're [00:20:00] my boss, I'm just going to say yes. I wouldn't have liked that. He had an intellectual argument on both sides and he won one and I won one. It was just based on logic. It wasn't based on roles and power.

B.: I saw people, I think a lot of people think that things get done when people agree, and I actually disagree. I think the best things get done when there's actually friction it's like, I disagree with you, I candidly disagree with you actually. We are going to have a debate and that's how you spark fires. That's how you spark really great creativity, really great ideas. That's exactly what I mean. That's why I don't trust people when I'm like, "Wait, you disagreed with me?" There's no way, it's like there's no way you should agree with me. You should be able to have a robust conversation. Now actually, David, I think one of the things you're trying get to in that conversation too is your proprietary idea around build better products faster. Maybe you could spill a little bit more flavor around that and what that means and how maybe even in that scenario, that's what you were trying to get that person to see.

David: Yes, great. Me better products faster are exactly what you were saying, B. It's how do we have that debate among ourselves about what we should build? How do we get the smallest thing out and let the market tell us whether we're right or wrong. People have this philosophy that product managers are supposed to know everything about the product or often to say it this way. Often engineers have that philosophy.

Product manager, you tell me what the market wants, I'm just going to go build it. I am objecting all the responsibility about building the right thing as an engineer. I don't mean to just put this all this on engineers, but I come with the assumptions that product managers are flawed humans like everybody else. To build better products faster is, what do we believe is [00:22:00] directionally correct?

How do we build this? This is just general lean startup stuff, just a lot of companies don't know how to do it. How do we build the smallest implementation? How will we know when in the market, whether we're specifically correct or not? How do we do that as quickly as possible, release as quickly as possible, get that feedback, and then how do we reconsider what do we do next? It's that getting that loop short and tight, that's about building better product faster. Then how do you align that with the strategy of the company? Sorry, I'm not giving very specific examples because just of confidentiality, but I'm working with a company that doesn't really have a good strategy.

In this case, we got the loop type between product management engineering and release and getting feedback. I'm saying to the CEO, your people are operating or floating in an environment, let's work on your strategy. Better products factors, having a thesis of here's who we serve, here's how we're going to serve them, here's that loop between product management engineering and product manager conceives of something. We build it, we get that feedback, and then we reevaluate at all times.

That means having the right people in the right places, product managers having to understand something about the architecture they're building so they can make some choices. Engineers saying to product managers, "My job is to build thing, but help me understand why you want to build that. I could do that 80% of that and 20% of the time." It's that engaging them being on the same team, is about building better products faster. It's the strategy, the people, the process, the communication. That's what's important.

Tam: David, it's interesting you say that. I've seen the same things in my career. I was a former product manager before that, an analyst, and then a strategist. Basically bridging this gap between strategy and execution, seeing the same thing. [00:24:00] You can tighten up this very programmatic process of agile. Get this continuous feedback loop. You got them, you can get them really tight and still, they're just delivering the wrong thing to the market faster because strategy is still the gap.

I think that ties into what we were just talking about before, like how do you know when something is not going to add value, and you're like looking for the red flags? One of my biggest red flags is someone who believes in their own bullshit. Not someone who's spewing bullshit, but the person who believes it internally for real themselves will say, this layman is bullshit but in design, we call this design fixation.

You are so fixated on this idea that you can't see anything else. You have no possibility of anything else, which is why you go full throttle into agile and deliver anyway no matter what this feedback loop says. I leave, I made this bet some years ago that a lot of these companies that were prioritizing this agile transformation was really just prioritizing their method of delivery, but they were suffering in this area of strategy.

A lot of that has to do with what you'll see out in the founder's market, but these people come from companies. They get that behavior comes from somewhere, and I've seen it at VP-level companies, enterprises have a lot of money. Somebody executive wakes up, they have this idea, this brilliant idea, and they have enough money and resources to put a project team together to say, go explore this. What they really hear is go tell me I'm right.

That starts this chain reaction of, let's come up together with a business case that satisfies sponsor of this business case and this is how we move forward. Have you seen anything like that, or what do you attribute to this still this lack of activeness between development strategy and the execution of agile, which we're getting really good at, but we're still seem to be missing on what is the right thing to build?

David: That happens a lot. It's hard to-- the thing [00:26:00] you point out, Tam, is it's hard for an employee in the company to tell the executive that doesn't make any sense at all. That happens quite a bit. The thing that I ask is, how will you know if you're right and what is the value of if you're right? Happens because agile is often something that happens in product management engineering to your point. It's about, how are we efficient in what we do? How do we run really fast? What often happens, and this is why I talk about being effective, not efficient, is are we doing the right thing?

Agile, that's why I tried to bring agile methodologies or philosophies to the executive level. It's easy if you're an executive and you have a lot of capital to say, "I'm going to test this and this and this, or I'm going to try this and this and this. I just woke up, I think I'm brilliant. I had a great shower. I'm going to, let's just do this." By the way, super frustrating for the people in the organization. The way to combat that is to say, "We don't have infinite capital.

We can't test everything. We're going to have to make some choices. Why is this the best choice and how will we know?" Agile's really good about doing retrospectives at the end of sprints. What people often forget about is doing retrospectives at the end of product releases. We had this bet on the roadmap. How'd the bet do? Did we underperform? What happened? Let's talk about what do we do differently. Did we overperform, oh, that's interesting, we perform better than we expected.

What did we learn from that? [00:28:00] Bringing that idea of retrospective up to the executive level, starting with, how is what you're suggesting fit in the strategy? Let's put it on the roadmap, let's do the retrospective is part of the solution that I worked for the CEO once and he was brilliant. Every day, he had five good ideas and he would come and say, "I want to do this. I want to do this. I want to do this." One day I had to say to him that I'll call him Fred, "Fred, that is a great idea. That's in fact your 10th-grade idea this week. Help me understand how this fits in with your other great ideas."

At some point, it's up to the people that work for that executive to say, "This seems like bullshit to me." Now, I said it in a nicer way to the CEO, "You've presented me with a problem of these 10 great ideas I've got to pick. Help me think through this problem." Now, I will say fairly that in internal, we are consultants. It is easier for me to say this to a CEO or an executive than an employee.

I tell people, we're pre-fire. We're never getting a raise, we're never getting promoted. We don't have any tech, so it's easier for us to say. When you see this pattern of this executive coming and having ideas that aren't tethered to the fundamental strategy or mission of the company, and there's a constrained resource like capital, that's where you have that conversation. How does this fit in the constrained number of things that we can do for the year? Let's have this conversation. If you have an executive that continually says, "This is great, we should just do it." [00:30:00] Help me understand why. There are some people by the way you will not solve this problem. There are some people that will just always be lean to the next shiny object.

Tam: Fixated. Call that--

David: Fix fixated. That's exactly right. There's others that you can have a logical argument with that we have just fixed our capital, fixed our time, whatever that fixed resource is, and say we need to make some decisions. That's the way that as an employee, you can have the conversation. If it's a consultant, it's easier to have the conversation. I can say, here's things that we've seen. Let me tell you're headed right into a trank. I'm at you.

B.: Really happy that you said that because it's so interesting because I was telling. I think Tam and I both have come to the conclusion that it's very unlikely that our first choice will ever be to work for someone again. I will say the majority of the reason I feel that way is because I realize I get a lot more respect as a consultant than I do as an internal employee.

In fact, I think that's part of what's wrong with modern employment is like why do you have to pay me a lot more for me to come in as a consultant when I could actually be your employee and be happy and actually just work there. Obviously, you've been doing it an even higher level, a much higher level than even we'd have been doing in our career.

Why do you think that there is such a bias towards outside consultants or other people instead of either A, thinking about your hiring and hiring better if you don't really trust your employees right before [unintelligible 00:31:35] is a great example, or B, entrusting the people that you've actually hired to do the work well? Part of the reason I ask this question is that, our listeners are primarily other founders and things like that. I would like to have them hear from someone who's in this role who comes in and helps people be awesome to understand what you look at teams and how they utilize or underutilize their team members. [00:32:00]

David: Novelty can be shocking. A consultant is a novel. They come in, they see some stuff, they say things in a different way in a different perspective than you've seen before. New employees are novel. Employees that have been there for a long time, people just fit into habits, right? People are just used to each other, It's hard to say things that are new or novel or even see things that are new. When an employee comes to work for me, I say to them, we do a lot of things wrong that I can no longer see. We're going to meet in 90 days. I want you to write down all the things you [unintelligible 00:32:44].

By the way about day 91, you may not see them at either. I want those new eyes. Consultants always have new eyes and the relationship with the consultant is always new. With an employee who's been working there for three or four years, the relationship isn't new. That person fits into the environment, right? Consultant doesn't fit in the environment. The other thing is the advantage consultant has is [unintelligible 00:33:14] been doing this, internally, we've been around for nine years, seen a lot of patterns than a lot of companies. I can pattern match. I have a lot more patterns than an employee who works someplace for four or five years than goes to the other one, so that's helpful too, but novelty is really helpful and it's hard for people.

We're going into a technology recession or we're in a technology recession and it's harder for people to get jobs. People should be less afraid of losing their job. Especially if you're an engineer. Now, don't be an ass. Be a good human, but you should be less afraid of saying things that you think are true to the people you work for. [00:34:00] Because you're switching costers lots smaller than you think. At least for me, and I think it's generally true.

I want to work with people who tell me things that I did not see that are interesting. I used to have this guy come into my office, he'd shut the door back when people had offices, and I'd go, "Oh crap, I'm in trouble now." He's going to tell me something. Invariably, this guy's name was Eric. Invariably, he'd come and shut the door. I'm like, "Oh, crap, what did I screw up?" It takes a little bit of-- Eric had a little bravery to him. He wasn't right 100% of the time. I didn't care about him being right 100% of the time. He was a great employee because he saw things I did not see and he would tell me. Those two attributes see and tell.

Tam: I have a heuristic for signs to watch out for after seeing this so many times it's a person who asks no questions has already made up their mind and these are people to stay away from. They are fixated, they are immovable in some way, and I think that they lead to a lot of these things that you're talking about. Just bad ideas that go out into the market. That's my hero risk now. Someone who asks zero questions, fixated.

David: I think that's right, but there's one other thing I would say, as a supervisor, a boss, a manager, call it what you will, if you have people that work for you that aren't asking questions, you need to go and say, "Hey, Jill, Susan, whomever, you didn't say anything. You can say it nicer than that. What do you think?" Sometimes because you're in a powerful position based on your title, you need to sometimes seek it out.

You'll have people that are scared of you, that are shy, that whatever you say has more powerful because of your title, you got to go and ask. [00:36:00] I want my people to say things to me. If they don't say it, I'm going to ask. By the way, here's my thesis. If I'm hiring you, you're smart. If you're not smart, you're not going to stay here. By definition, because you're staying here, I think you're smart, I want to hear you. I've said that to people like, "You weren't here for a while." That means I don't think you're stupid. Because if you were stupid, I would've fired you. Now that we've established that I have respect for you, tell me what you think about this.

B.: What's so interesting is I think we're starting to really start to piece together what an awesome human that we believe in. Who's going to do a successful, it's going to create a successful company as someone they have healthy debates, right? We've got that no [unintelligible 00:36:48] person who changes their mind. They're not flimsy, they listen very thoroughly, and if they don't hear all voices, they seek out that person to hear that voice.

I think that's very significant because also the thing like what we're also implying, is that this is a person who's probably also pretty inclusive, right? This is a person who looks around them and goes, "I've brought you around this space and I'm bringing you here because I want us to be excellent." I think that's a very important thing to note there because I think it's very important to think about that when you think about how to create a billion-dollar business. Now so, David, this is a great transition.

You have supported many billion-dollar businesses now, right? You got a little bit of a track record here. Tell us a little bit about what that's like? Some of them you literally started from with them before they hit those numbers, other ones maybe came a little bit later. Tell us a little bit about that experience.

What does it look to work with these type of high-flying companies, shepherding them, the things that you encourage them to watch out for? I think maybe only ending up into acquisition. Because I think, I don't know many people who have been a part of a billion-dollar acquisition. A lot of people-- I've [00:38:00] known more people who've actually been a part of IPOs than an acquisition. I think that's a little bit of a nuance here too. Give us a little bit of color on how this all works.

David: Particularly, if they were founders and built these companies up. I've worked with several unicorns where it was founder-led still at the multi-billion dollar stage. They have a vision, they care, and they communicated consistently. This has been my experience.

I was about Linda.com. Linda was a real person. When I started consulting to them, I was running engineering on an interim basis for her and about two weeks in, I got this flame mail from Linda. She said-- I went and subscribed from her email list and she's still getting marking emails from us, wtf, except she didn't abbreviate. I was like, lady, I just got here. Don't know, it's a marketing email. Like, really?

This is my internal monologue. This is what you're concerned about. She's the founder of the company and running it in the whole thing. She and her husband owned 80% of the company. I went and did some research and I came back to her and I said, turns out, Linda, there's two marketing email lists and when you unsubscribe from one, you don't unsubscribe from that, I'm still thinking, I cannot believe that she's concerned about this.

At this point, they were doing about 75 million a year in revenue. They're going 50% year over year, huge margins. I'm like, really? I said to her, "Linda, by the way, how do you know about this? How do you know this woman unsubscribed from an email listening still getting marketing email?" She said, "I read every email that people write that come into our company." She said, our value here is I'm creating educational opportunities [00:40:00] for people that didn't go up the normal track. I want to make sure that our users get value, the people that create our courses get value, and our employees get value. Everybody in the ecosystem. I read every email that comes in. My attitude went from, "Really, you care about this?" To like, "Oh my God, you care about this." She was really inspirational, was the thing that I said before about delivering value to other people and getting revenue as a side effect of that. She was concerned about that. Because of that, she could communicate that to the whole company, and you were either on the mission, or you were off the mission.

You were off the mission, that was fine. You just didn't work at the company. I found founders that create unicorns are like that. They have a mission, it's clear, they live it, and they make sure everyone in the company lives it. At Disney is a little different because when we were consulting in Disney, when I was consulting to Disney, it was way after Walt Disney was dead. The founder wasn't there. People there did care about creating value, but Disney's more complicated. There's more people, there's more bureaucracy, there's more politics.

The conversation there was just about clarity. In that case, it was me bringing clarity to the executives I was working with about how were they going to grow the Walt Disney company by creating value. It's the same theme. Sometimes in the case where it's a large corporation like that, people have forgotten that. I'm not saying this is true of the Walt Disney company, but people have forgotten that the company is only sustainable if it continues to create value. We drawing that mission to say, you can generate more revenue by doing these things for your customers, for others.

Then in helping them, use that as a way to, "I'm going to state this in a way that I don't love, creating political power around the organization to say, "I'm going to help the company achieve its economic objectives, to achieve the objectives of other people." People in department A or department B that don't agree with me, here's how lining this way will create value for all of us. Then having that debate that you talked about, that clear and open debate, what you talked about here.

I find the people that align around that, that then can align the company mission, bring the other people in with them.

B.: I really, really appreciate that. It's so fascinating because when I think about some of the greatest [inaudible 00:42:52] normally I would say Tim Cook. This is when I think of Steve Jobs. Steve Jobs, as far as I know, no one will ever say that he was a nice guy. No one's going to say he walked into a room and I felt comfortable and safe. They were like, "When he walked in a room, I felt like I needed to step up and be the best version of myself because Steve was going to ask me something that was so specific to my role or what I should be doing, that if I wasn't on point, I knew I might get fired."

I think in some ways, it's not all-lovey dovey, but his level of acumen and excellence, it was pervasive through all of Apple. Accountability, yes.

Tam: True or false, and he held everybody accountable.

David: Exactly. That's what I love. He embodied the mission. Then he was like, "Every room I go into, you have to be saying the exact same thing that I'm saying. You have to be responsible for the exact same thing that we set as our standard." I think that's actually, I think in some ways, what you're saying is that's the difference between building our company and every other company.

I remember every company of mine that I was just like, "Honestly, I love working here." I can tell you what the mission was. I couldn't tell you what the core values were. I knew that what [00:44:00] my job was, I knew what my job was, is to do whatever the thing was that they told me to do. The only companies I know what the mission and values were at my entire career, Sprout Social, Netflix, and Apple. I cannot tell you at all about any other companies in my career.

Tam: Also, one thing, I believe a CEOs job is to define value. That is the one sole purpose of a CEO, CTOs job is to build value. I would say that I think that Steve Jobs did an excellent job with that, I think that this is probably the differentiator between companies, let's call these Apex innovators, those that do it consistently. Is they are very good at consistently defining value, even if that value changes.

A lot of people like to give a lot of flack to Tim Cook in the way that he's running Apple. He has just defined value differently. He's more of an experience and a service provider, is what Apple is, but he is defining value differently, and I think he also does a good job of defining value for the company. They are executing on that.

David: I agree with what you guys are both saying. I'll give you two example. I'll give you a Steve Jobs example. I was at Apple meeting with executives after Steve was gone when Tim was running it. I was meeting with the top executives, and Tim walked in a room for a minute. I was talking to one guy, I won't say his name. When Steve came back, Apple had, I don't know, 10X products that they have now. He was having everyone come and brief him, and the proc, and that's how the proc was going to live or die.

This one guy was in the elevator with Steve, just happened to be in the elevator with Steve, and he built some kind of colored printer. Steve said, "Hey, what's in the box?" The guy said, "It's a colored printer, blah, blah, blah." This guy came in for Steve Jobs later that week. Talked to pitch his product and Steve said, "Oh, you don't have to pitch your product, your product's already dead. I heard what it was, and it's not with our mission. Sorry, it's dead."

[00:46:00] Now, B., to your point, Steve was not a nice guy. I have other stories that I've heard, but he was not nice. He was clear. Everyone knew what Apple stood for, just to your point. I'll give you another story, Bill Gates' story. Microsoft offered me five jobs in two years. The last job, I was going to be product unit manager of [inaudible 00:46:19] identity product. The guy I was going to work for said, "You're going to brief Bill Gates once a month. Most product unit managers brief him once a year. You're going to brief him once a month." I thought, "That's going to be awesome. To be with Bill Gates once a month to sit with him."

I said to him, the guy's name was Robert. I said, "Robert, that's going to be great." He said, "No, it's not. Bill Gates makes Steve Ballmer cry." His vision was so broad around the industry and around Microsoft, and he was so incisive and determined to make Microsoft the thing. It's hard to be around Bill Gates. I will tell you about Microsoft. They had an operating system that was dying. They knew it was going to die because the internet. They shifted focus to the internet. They've shifted focus several times, just changed the direction of the boat quickly. They did it again last week with Bing. Who uses Bing?

Tam: Defining value.

David: They define value, exactly. They're like, "That is the DNA of that company."

Tam: We're coming up on time, but I wanted to ask you this predictive question, we need to bring people on, smart people and ask like, "What do you think the [unintelligible 00:47:30] Because your background is in an AI and just because you just mentioned Microsoft and you just mentioned Bing. What is the defining value of Generative AI?

David: That's a good question.

Tam: You've got the floor.

David: Defining value of Generative AI. Boy, Generative AI is a double-edged sword. I got interviewed by a significant [00:48:00] magazine the other day. They're doing a documentary on Generative AI. Here's this [inaudible 00:48:10] used it this way, "I got to write this paper. I got to write this document. I don't know where to start. I'm going to talk to ChatGPT for a minute and just see what ChatGPT has, and use that as a basis for me to start riffing off of. It's useful. That's useful. I was watching a show last night, I think it was about deep fakes, making president or some political figure or someone say something they didn't say. That's scary.

Here's the thing that's scarier. Now doing misinformation of new sources that say they saw that person do that deep fake. Now you have tons of information that validate that thing that wasn't true. I think Generative AI could be very positive in a bunch of stuff and to the extent that it gets better as a replacement for search engine to give me real data. I'm not sure we know it's like Prometheus and [unintelligible 00:49:19]

B.: Coming from the investment lens, that's the number one thing I'm getting. I'm getting so many proposals of, "Invest in my AI company." I asked him about this, I was like, "We need to actually go out. How would we even figure out which of these AI companies we would actually be interested in versus other ones?" Because they don't have clear use cases. [unintelligible 00:49:44] I saw another one last about trying to use AI to a creative. It's like, the best creative to use or something like that. I was just like, "Yes. At the same time, I can just look at my built-in analytics and see which one of these creators did the best." I'm not sure if that's super useful to me. [00:50:00] Having said that, how would you go about thinking about which of these will actually have value? How would you go about defining or figuring out which of these AIs is actually going to be a winner or which one will actually do something that--

David: I think it goes back to the same thing I've been preaching. It's like, serve what value do you bring? I had a similar conversation to the one you were talking about. A generative AI company that said-- and I actually think this might work, I don't know enough about the market, but the generative AI company that came to me and said, again, we have a generative AI company that creates graphics with a similar theme for a company.

The next time you see the M&Ms, they're doing something a little different and that's something a little different again and that we can generate, that we know that people are doing this job manually today, and we could speed that job up by creating end versions of that ad that people could pick from and then do it. I listened to Rick was on a podcast with Tim Ferris, listening to this the other day.

Tim Ferris asked him, "Now there's generative AI, there's just tons and tons of music. Why isn't that good?" Rick Rubin said, "I listen to music all the time and then I hear a clip and then I vibe off of that. I do things for that. I forgot which hip hop artist was." It wasn't Jay Z. It was someone you know. I can't remember who it was. He's just always listening to music to figure out what to sample, which is the same thing I said about using it as the muse, using it as giving me things to look at.

In this case for this company for investment, "Okay, that's a real market." People are doing real things. [00:52:00] They're using generative AI to speed that process up. It's electricity and the internal combustion engine when it used to just be horse and buggy. That's the way I would think about it.

Tam: I would say one of the things I would say there's a lot of talk on the internet about they were making comparisons to the adoption rate of ChatGPT versus that of crypto and how the explosive adoption rate. I don't put crypto and generative AI in the same bucket. AI for quite some time. My prediction on the future, it's still very short at this point is, if you look at AI as capability, the same way the internet is a capability, WiFi and Bluetooth, these are capability.

It's enablement technology. What it's going to allow a lot of people to do is to create new solution, a plethora. You're already seeing it, B., all these decks coming in saying we're AI companies. There are going to be a lot of experiments that come out and then there's going to be some consolidation. There are going to be a lot of startups that are basically developing a feature that something like a larger company would then incorporate once they prove that point.

I do think that there's going to be a lot of good things coming out. Here's one question I want to ask. Do you believe in the argument that generative AI is going to take away a lot of jobs?

David: I think it's going to change the economy. I'll give an example. This is the classic example I always use is, how many elevator operators do you see? Back in the day, zero. There are zero. How many elevator operators you see on that? Back in the day, you'd go in, there'd be an elevator operator, they would slide the little metal gate. They'd go to Bradbury Building, downtown LA. There's still a dude who does this.

They had these weird levers they would operate. I've seen zero elevator operators on this [unintelligible 00:53:50] and will operate elevator [unintelligible 00:53:52]. The economy has created more jobs. If to the extent that it creates new [00:54:00] value, creates new kinds, people will lose their job and other jobs will be created. That is the bed of capitalism is that we're automating things and creating wealth and that wealth expands the economy.

If you believe that, then the question is, what are the macroeconomic effect? There's a transition where people lose the job they have before that wealth gets created, before they get sucked up into that. That's the societal aspect. How do you deal with the macroeconomic effect?

B.: Before we transition to our last question, the biggest thing for me with AI is that I really want to understand how they're going to do two things. One, ensure that they are in copywriting, because I have definitely seen pieces where someone's like, "Oh, I used ChatGPT." I was like, "Wait, let me actually just go copy this." It was actually specifically from another article. At the very least, ChatGPT should be able to let this person know I've quoted or whatever.

I thought that was very interesting. I happened to know that because I've read the article because I was like, "That sounds exactly like the thing that's said [unintelligible 00:55:01] article. Then the second thing is the bias stuff. It actually really is. When you look at Dolly, it has problems when it comes to ethnicity. For instance, I was like, I am a Black person holding a Black baby. It was very interesting to me how each of these images, they were not typical images of Black people, first of all.

Black people come in different shades, but these are people who, if you looked at them, they looked like they were White-passing people. I was just like, "This is very interesting." They cannot seem to understand I say I am a Black person because I was trying to create something for myself and my son. Those are two great examples, again, about what we were talking about earlier about having inclusive conversations. When you try to bring lots of people into your conversation so you can build the most value in your product, I think that's something that Generative AI still have to figure out how to do that because you need to bring in more people to handle this because I'm sure that they don't necessarily have a lot of people who look like me who are asking that [00:56:00] particular question. If they could figure out how to get more of me in that room who might ask that question, it could be an even better product investor. I think that's a significant thing there.

Now, having said that, we're to our last question. This is always a very easy one. David, what you doing? What you want people to know about? Break it down to them. What do they need to know about you and where they can find you and all this other good stuff?

David: Oh, great. Thanks for that question. Before I answer it, this has been super fun. I really enjoyed this. This has been awesome. Look, in turn, as you said, does better products faster. We help technology companies figure out how to build products. There's four things we do. One is we'll go and look at product management engineering teams and think out and help come back and how to make them more effective.

We'll say, "What is the strategy of the company? What is the technology of the product management team needs to build the strategy?" We'll get calls from the CEOs, where they'll say, "I keep putting cap on to product management engineering, and I'm not doing it, or we're just hitting scale and stuff that got us here, we cobbled this together, isn't going to get us there, help." "We answer that question by doing these deep dives," I explain.

That's the first thing we do. Oftentimes, companies will say to us, "Great, now you've given us the recipe that the diagnosis and the prescripts run this prescription. If they have a CTO or chief product officer, we'll coach them. That's a second service. If they don't have someone in the seat, we'll run a technology or product management department in our business or both. We'll help bring the teams up to the next level. Get them green.

If it's green, yellow, and red on the things that they need to do, get them to green and everything. Help hire someone behind. That's the third. The first is deep dive. The second is a coaching. If there's not someone there, we'll run the department, get them to the next level, help hire someone. [00:58:00] The last one is for VCs, PE firms, M&A transactions with diligence on product management engineering. We're all about how to get these teams aligned and effective in executing and strategy.

B.: Really simply, if you have a problem, you have essentially three people in this podcast, depending on how you're trying to handle it, that can really help you knock it out of the park. As I told Tam, I was like, "I'd be able to come on because my conversations with him were very delightful." I'm hoping that everyone also agrees and that you to David and you will be introspective and ask really good questions and be inclusive. Really make sure you're delivering value.

Thank you so much for listening to the Drops Podcast. We love having you. We love your feedback. Please do connect with us across social media. We are the Drops Podcast on Facebook, Twitter, and TikTok. We also have a great email, the dropspodcast@gmail.Com. You can send in any questions that you have and we definitely would love to answer them on the podcast. Feel free to ask just about anything because we have experienced a ton of different things. Again, thank you so much for listening to the Drops Podcast.